Recent mortgage complaints and a report on mortgages to first-time homebuying servicemembers

1. Recent mortgage complaints and a report on mortgages to first-time homebuyingservicemembers VA lenders conference | April 24, 2019

2. Disclaimer This presentation is being made by Consumer Financial Protection Bureau representatives on behalf of the Bureau.  It does not constitute legal interpretation, guidance or advice of the Bureau.  Any opinions or views stated by the presenters are the presenters’ own and may not represent the Bureau’s views. This document was used in support of a live discussion.  As such, it does not necessarily express the entirety of that discussion nor the relative emphasis of topics therein.

3. Bureau representatives Tony Camilli, Lt Col, USAFR Policy and Outreach Specialist Office of Servicemember Affairs Patrick Lapid, Ph.D. (USMCR Veteran) Economist Office of Research

4. Overview • Background on the OSA • Home buying education tools and resources • Recent mortgage lending issues reported to the OSA • Report on Mortgages to First-Time HomebuyingServicemembers and Veterans

5. Background on the OSA

6. OSA mission #1: Financial Education Order at: https://pueblo.gpo.gov/CFPBPubs/CFPBPubs.php

7. OSA mission #2: Monitor complaints

8. OSA mission #3: Improve consumer protection

9. Home buying education tools and resources

10. Buying a House consumerfinance.gov/owning-a-home

11. Your Home Loan Toolkit • Worksheets, tips, and research starters to help people shop for a home loan • Available in Spanish and English • At consumerfinance.gov: More mortgage help • Under Consumer Tools, click Mortgages • Under Practitioner Resources, click Free Brochures

12. Money Topic Resource Portals – Mortgages consumerfinance.gov/consumer-tools/mortgages/

13. Ask CFPB consumerfinance.gov/askcfpb

14. Recent mortgage lending issues reported to us

15. Complaints received by product* *Apr 1, 2017 – Aug 31, 2018

16. Types of mortgage complaints and products from servicemembers, veterans and military families* *Apr 1, 2017 – Aug 31, 2018

17. Types of mortgage complaints and products from servicemembers, veterans and military families* *Apr 1, 2017 – Aug 31, 2018

18. What we’re hearing … • Complaint #1: “I am at a complete and total loss. I need help. I am trying to serve my country, but it is difficult to concentrate on that when in the back of my head I know my family is in jeopardy of being homeless because of the unresponsive, unethical and illegal practices of _____________.” • Complaint #2: “It was terrifying to live everyday with the possibility of being forced out of your home even you sought assistance and assistance was there but not for me, a veteran.” • Complaint #3: “This has been our primary home since 2008 and were up to date with our mortgage company ________ up to hurricane Irma. We are a military family with girls under the age of 6. … I am filing this complaint because due to the lack of attention to our case this is affecting us and they have denied to reopen my case for the disaster modification.”

19. Mortgages to First-Time HomebuyingServicemembers

20. Report in brief • How have first-time homebuying servicemembers’ (veterans and active duty) home loan choices evolved from 2006 to 2016? • Comparisons across the following areas: • Loan types (VA, conventional, FHA/USDA) • Median loan amounts at origination • Early delinquency rates: 60+ days within one year of origination 20

21. Data description and sample selection • Consumer Credit Panel (CCP): 1-in-48 sample of de-identified consumer credit records • Servicemember Civil Relief Act (SCRA) database match • Performed by consumer reporting agency • Sample for analysis: first-time home buyers, age 42 and younger, who took out a home loan between 2006-2016 • Servicemember status from SCRA • First-time home buyer: no prior home loan as of 2005 Q1 • Age ≤ 42: SCRA data requires military service after September 1985; older servicemembers not identified in CCP/SCRA match 21

22. Home loan shares to first-time homebuyers • All values expressed as percentage points • Active-duty status only known from 2008 onward 22

23. Home loan shares: first-time homebuyers, servicemembers vs. non-servicemembers 23

24. Home loans to servicemembers: by credit category 24

25. Median loan amounts: by loan type and servicemember status 25

26. Early delinquency rates: by servicemember status, credit category, and loan type 26

27. VA early delinquency rates: by active duty status and credit score 27

28. Summary • VA loans among servicemembers doubled in market share from 2007 to 2009; rose to almost 80% by 2016 • Conventional loan share among servicemembers declined in response • Similar increase in market share across servicemembers with nonprime and prime credit scores • Early delinquency rates for VA loans for nonprime borrowers: • Lower rates compared to other loan types up to 2009 • After 2009, lower than FHA/USDA, higher than conv. loans • Active-duty borrowers have lower delinquency rates compared to veterans 28

29. Connect with the CFPB & the Office of Servicemember Affairs @CFPB @CFPBmilitary military@cfpb.gov E-mail distribution